It costs you $10 to get a sandwich at work for lunch. It would cost you $2 in ingredients, and five minutes of time, to make that sandwich at home. Do you earn $96 an hour, after tax? If so, you can ignore the rest of this article. If not, try making the sandwich.

Financial planners say that when new clients audit their household spending for the first time, the biggest shock is usually how much they spend in restaurants—70% of which goes to paying the restaurant's rent and labor costs.

Why do we go out to restaurants that promise "homemade" food?

2. Stop the bleeding.

If you're like a lot of families, you spend $200 or even $300 a month on cellphones, cable or satellite TV and Internet.

Take a scalpel—or an axe—to that budget and see what you can cut. Call your cellular provider and your TV company—cable or satellite—and haggle. Chances are, they will cut you a deal.

Try dumping pay TV altogether and watching movies and TV instead using an online service like Netflix, Amazon or Hulu Plus (partly owned by News Corp., owner of The Wall Street Journal), for less than $10 a month.

If your family spends $200 a month on cellphones and pay TV, that's $2,400 a year. Over the course of 20 years, if you invested that money instead at 4%, you'd have an extra $70,000.

Haggle. Cut.

3. Hold a two-week auction.

Turn your house into Sotheby's for two weeks. Go on eBay.com and Craigslist.com and auction off everything you don't need. The spare cellphone(s) in the kitchen drawer. The second, unused lawn mower. The designer vase you never use.

Everything.

Set yourself a target. Double it. Then see how close you get. Get the entire family involved. Removing clutter is a great stress-buster, as psychologists since Ralph Waldo Emerson have noticed.

This project will raise some free money. A process like this also has a remarkable way of focusing everyone in the family on the true value of a dollar.

Thursday, June 21, 2012

The so-called Bush tax cuts are set to expire at the end of the year, Investor's Daily reports.

That means that all of the current income tax rates will rise to pre-2001 levels overnight. The lowest rate will jump from 10% to 15% and the highest from 35% to 39.6%. Although Congress extended all of the cuts at the end of last year, some Democrats have pledged to let the tax cuts expire for the "rich" — individuals making $200,000, and $250,000 for families.

Pre-2001, dividends had been taxed at workers' income tax rate. The Bush tax cuts dropped the rate on dividends and capital gains to 15%. Thus, if the Bush tax cuts expire, the dividend tax for high-income workers will jump to 39.6%.

But there's more. The health care law imposes a new 3.8% tax on passive income, including dividends and interest. So the effective dividend tax rate for those at the upper end of the income scale would nearly triple, to 43.4%. Happy New Year!

And don't forget that dividends have already been taxed as corporate profits — so they're taxed twice.

Although proponents claim that these tax increases will only affect the wealthy, this looming tax grab will also have a significant impact on middle-class Americans who don't have to pay it directly. And the impact could weaken America's fragile financial markets further and unintentionally erode the value of the savings of millions of Americans.

Companies looking to expand their operations and create jobs, of course, are likely to think twice before doing so in high-tax locales.

Heightened dividend taxes won't just hamstring overall economic growth. They'll also hit individual investors where it hurts — in their pocketbooks. Dividend income for some investors could drop by 33%. And it won't affect only the high-income workers.

For starters, higher dividend taxes will make stocks that pay dividends less attractive to investors. So those who currently hold dividend-paying stocks — everyone from middle-class folks with 401(k)s to union pension funds to non-profit foundations — would see the value of their investments decline substantially.

Further, higher dividend taxes will likely cause companies to cut dividends in favor of deploying their cash in other ways, like re-purchasing their own stock. So individuals counting on their share of a company's profits for their income — which they'd normally receive via cash dividend — could find themselves out of luck.

That would be particularly bad news for retirees, many of whom depend on dividends as a staple of their fixed incomes.

According to the IRS, more than half of dividend payments go to Americans over age 65 — and almost 75% go to those over age 55.

"This is the first generation in history to retire depending primarily not on defined benefit plans but rather on contribution plans that are disproportionately comprised of dividend income," notes former New Hampshire Sen. Judd Gregg.

"It will be a bitter pill to swallow for a lot of people whose only pathway to adjusting to their reduced income will be through a commensurate reduction in their standard of living."

Saturday, June 9, 2012

And we don't even admit we have a problem. Workers often compete to see who has less of a life than the next guy.

Americans work more than anyone else. In fact, we work 100 hours more per year than the famously nose-to-grindstone Japanese. And we put in up to three months a year more than Europeans.

America is the only country that does not mandate paid vacation leave. China gets three weeks. Europe averages six.

Call it the incredible shrinking vacation. The average vacation in America now numbers a pathetic three to four days—a long weekend. And this year, according to a recent survey, one in seven Americans is taking no vacation at all.

Second, maybe the reason is, duh, money, from former President Clinton:

"Median income, after inflation, is lower than it was the day I left office. So those people who would be affected by that, many, many of them have had no income increases in a decade while their costs have gone up. So you really would have a contractionary economic impact. It would be very bad for the economy if those folks in the bottom 98% had to shoulder a tax increase."

That would be a tax increase advocated by your President, what's his name.

For the sixth year in a row, tuition at the University of Wisconsin’s four-year campuses will go up by the state’s legal maximum of 5.5 percent. Students at the four-year campuses can plan on budgeting an extra $400 for their tuition during the coming year, with no increase in financial aid.

Obamaman really did not mis-speak when he said "the privae sector is doing fine." He meant it in relation to the public sector, which has been losing unionized workers paid more than average non-union workers and who contribute to the Democratic Party. He meant it.

The belief that the private sector is rich and the public sector is poor, so that transfers of wealth from private sector to public sector are endlessly justified, is embedded deeply in Obama’s ideology. Most everyone knows that times have changed. Government spending consumes an ever-growing share of America’s wealth, and study after study shows that public sector workers are paid vastly better than private sector workers. In today’s world, opulence is far more a feature of the world of government than of private industry. But this is a fact around which leftists like Barack Obama simply cannot wrap their minds. They cling bitterly to the old stereotypes, because to do otherwise would call into question their entire worldview. To them, the private sector is always “doing fine;” if anything, in their hostile eyes, too well.

Monday, April 16, 2012

A strong case can be made that the fundamental supports of the housing market-- demographics, employment, creditworthiness and income--will not recover for a generation, Charles Hughes Smith writes.

It can even be argued that housing has lost its status as the foundation of middle class wealth, not for a generation, but for the long term.

Blame it on the Baby Boom.

We can stipulate that the Baby Boom (65 million people) will be downsizing their housing, i.e. selling for the next two decades. We can also stipulate that most of the Baby Boom no longer has the wherewithal to buy second homes; rather, they will be dumping second homes to pay for living expenses as earnings, interest income and housing equity have all cratered since 2007.

Not only are there not enough younger workers to buy all these millions of homes that will be put on the market, few of those younger workers have either the creditworthiness or income to buy a house unless the Federal government gives them essentially free money and a no-down payment entry. With the Federal deficit skyrocketing, that sort of giveaway won't last long.

You might want to close your eyes here.

Meantime, people are trapped where they are by the lousy housing market.

Nearly 60 percent of Americans would move from their communities right now if they could, according to a new survey by the YMCA. But with economic and other financial considerations preventing them from doing so, nearly two-thirds said they will become more involved in their community in the coming year in hopes of improving quality of life.

Tuesday, April 10, 2012

Daniel Kahneman, psychologist and Nobel Prize winner, has gotten a lot of attention from his book, Thinking, Fast and Slow, which lays out how our brains work. The Wall Street Journal's Diane Cole asked him to apply the thesis to money management.

Typically, Kahneman says, people rely on blink-of-an-eye judgments, driven by emotion and impulse, in navigating life—even when we should be thinking "slow," using reason, deliberation and logic to weigh our options.

WSJ: In your book, you discuss overconfidence as a common pitfall. What impact does that have?

MR. KAHNEMAN: Overconfidence is everywhere. We all have clear and certain beliefs, and our certainty is not impaired by the fact that other people hold contradictory beliefs. We just think they are biased. When optimism and overconfidence come together, you get many mistakes. Optimistic estimates can in retrospect seem almost delusional. One example is that people end up paying about twice as much as they originally expected to pay for kitchen renovations.

WSJ: Any advice on how to avoid overconfidence in financial decisions?

MR. KAHNEMAN: I don't think individuals should be in the business of picking individual stocks, because they will be taken advantage of. What happens is that when the market is doing well, it is populated by geniuses who think they can try it for themselves. It's natural and inevitable that this leads to overconfidence and foolish actions.

WSJ: Can people learn from errors of financial overconfidence?

MR. KAHNEMAN: The first thing for people to know is to accept the limits of their knowledge. When you're young, you have time to make up for financial losses. But when you are older, it is a very concrete matter. You should be thinking about how much you need to spend every month. And many investment professionals are quite aware of that, so they steer people on a path toward diminishing risk, because those people don't have enough time to recover a loss.

Wednesday, February 15, 2012

Workers can spend about $3,000 a year on coffee and lunch, according to a recent survey by Accounting Principals, an accounting and finance placement firm based in Jacksonville, Fla.

"Don't think of it as $3,000, but rather what $3,000 per year would be in 20 or 30 years if invested at even low interest rates," says Burton Malkiel, an emeritus economics professor at Princeton University in New Jersey.

By saving $3,000 every year—that's $250 a month—you'll have a nest egg of $90,000 in three decades.

And they probably don't charge for coffee at The Home. Even if they do, you won't remember to drink it.